Chapter 11 - VAT Records and Returns

Question 1

Records

Answer 1

Each taxable person must keep:
- business accounting records
- copies of all VAT invoices issued
- all VAT invoices received
- documentation relating to all imports and exports and documentation relating to all EC acquisitions and dispatches of goods
- credit notes, debit notes and similar
- a VAT account
All must be kept for a minimum of 6 years

Question 2

The VAT Account

Answer 2

The VAT account must be divided into separate parts for the different prescribed accounting periods for which the business makes VAT returns. Each part must then be sub-divided into a VAT payable and VAT allowable portion

Question 3

VAT Payable Portion

Answer 3

Each return period should show:

• output tax due on all sales made in the period
• any earlier output tax errors discovered during the period
• any increases or decreases in output tax which have arisen during the period from changes in the consideration for supplies
• any other adjustments to output tax required

Question 4

VAT Allowable Portion

Answer 4

Each return period should show:

• input tax allowable for the period on all supplies in the period
• if any earlier input tax errors were discovered during the period, then any adjustments should be shown
• any increases or decreases in input tax arising during the period from changes in the consideration for supplies received
• any other adjustments to input tax required

Question 5

VAT Invoices

Answer 5

Most important document. Must met all conditions specified by HMRC if input tax is to be recovered by purchaser.
HMRC allow the issue of retailer invoices in certain circumstances (where the supplier is a retailer and the value of the supply including VAT is less than £250)
Conditions in SI 1995/2518 reg 14

Question 6

VAT Invoices Cont.

Answer 6

Must be issued within 30 days after the tax point

Question 7

Simplified Invoices

Answer 7

Where the consideration for a supply doesn’t exceed £250, VAT invoice only needs:

• name, address and reg number of supplier
• time of supply
• description to identify goods or services supplied
• total amount payable including VAT
• for each rate of VAT payable, the gross amount payable including VAT and the VAT rate applicable

Question 8

Retailer Invoices

Answer 8

HMRC allow the issue of a retailer invoice where:
1) the supplier must be a retailer, so must be selling directly to the public; and
2) the value of supply inc VAT is less than £250
If applicable, the invoice only needs:
- supplier’s name, address and VAT number
- the date of supply
- description to identify goods or services sold
- total payable including VAT
- rate of tax applicable

Question 9

VAT Returns

Answer 9

VAT 100 must be filed in each AP. A prescribed AP usually 3 months. Must be submitted electronically.
Deadline is one month and 7 days, same applies to payment.

Question 10

Electronic Payments

Answer 10

One of:

• online payment or telephone banking
• online debit or credit card using BillPay
• BACS
• CHAPS
• Bank Giro Credit transfer

Question 11

Penalty for Paper Filing

Answer 11

If you file on paper when an online return is required:
Annual VAT exclusive turnover:
- £22,800,001 + = £400 penalty
- £5,600,000- 22,800,000 = £300 penalty
- £100,001 - £5,600,000 = £200 penalty
- £100,000 and under = £100 penalty